Cabinet decision on Black Money Bill

18 Mar 2015 (AIR News Analysis)

Cabinet decision on Black Money Bill

Participants: Pranjuva guha Thakurtha, Economist and Deveshkumar Pandey, The Hindu.

Multi-prong strategy to check parallel economy – salient features?

Undisclosed foreign income & assets (imposition of new tax) bill, 2015 – String the two laws Money laundering Act (2002) and Foreign Exchange management Act (1992). Provide more teeth – to imposed penalty, imprisonment. Important element – 300% penalty and 10 years rigorous imprisonment, any undisclosed income is taxable at 30% plus surcharges;

Window given for the offender – voluntary discloser scheme? Escape prosecution?

Short term window;

to implement international treaties Automatic information exchange including

Proposal to strengthen the Benami transaction Act (in statute book since 1988) – dissuade people from illegally taking money outside India;

Stringent provision? Is it a step back to FERA regime? Whether govt. can bring back the stashed money outside India?

When India moved from FERA to FEMA – is to liberalized regime – to dissuade the people from violating the law – but it was other way around;

What about the countries like Tax haven? Is there any breakthrough?

Multilateral conventions – Tax haven (Low tax or No Tax regime) -80 hard Tax haven (Mauritius, Florida, ) – tax evasion, round tripping, money laundering - This issue need to be checked – it is complex; 90% of the black money generated stays back with in the country;

Instrument of Black money generation like Participatory notes? Whether these issues dealt in the bill?

No the bill is not specific in this regard; two things dealt Benami Act 1988 (framing rules after 25 years) and regulatory authority (SEBI/RBI) to establish audial lift corporate way;

Enforcement directorate are short staffed? Any provision to strengthen these bodies?

Quality of the staff (Adequate strength & Training) and Autonomy (Integrity);

Global financial Integrity – Estimate – India lost $430 Billion (Rs.28 Lac Crore) in the form of illicit outflow – between 2003 -2012;

SIT on Black money – advised for the better coordination of different enforcement bodies – any provision on these lines?

Also refer PRS summary of the proposed bill

http://www.prsindia.org/uploads/media/Black%20Money/Bill%20Summary%20--%20Undisclosed%20Foreign%20Income%20and%20Assets%20(Imposition%20of%20Tax)%20Bill,%202015.pdf